USA- France trade dispute

The tariff dispute between USA and France has started affecting bilateral trade. Recently, USA threatened to impose a 100% tariff on French imports such as wine, cheese and handbags. The threat comes in light of the recently announced French digital tax or the GAFA tax. The GAFA tax levies a 3% taxation on tech giants making their earnings within the country. This will especially affect tech giants like Apple, Google, Amazon and Facebook. Recently, the presidents of USA and France tried to negotiate their disputes over this digital tax at the NATO summit. The French position is that there is a need to curb tax evasion by these digital entities and the tax measure would be withdrawn as soon as the Organisation for Economic Cooperation and Development/ OECD comes up with an agreement. The US position is that taxation of revenues as opposed to earnings is a dangerous trend. Already, the US government has imposed 25% duties on French wine and cheese in response to EU aircraft subsidies. This 25% duty was levied as a part of its WTO sanctioned response.

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